MLM LAWSUITS Max and Melaleuca – Part 1

Why is it that we are so naive to believe that a network marketing company would never take their own distributors to court? Every time I turn around I have an email from MLM Watchdog, Rod Cook of  mlmwatchdog  warning of another lawsuit that has been  filed, this time Max and Melaleuca.  Either a network marketing company is suing another network marketing company or a company is suing their own distributors.

How to Provide a Successful Network Marketing Atmosphere for Distributors?  Stop taking your distributors to court and …

But hey the distributors would know that this could happen at the company’s sole discretion if they had read their policies and procedures.  The distributor would have realized that the company can do anything they want; terminate you, file lawsuits against you for things like using the company name in promotions or telling the world on Facebook that you are an employee of [xyz] company when indeed you are not.  What you are is an independent distributor or contractor in violation of your contract.

Just last week, February 21/ 2011 I received email notification from Rod Cook that Max International had to pay out to Melaleuca $1.2 Million. Read here  http://www.mlmwatchdog.com/mlm_melaleuca_non_compete_lawsuits.html

Max International is a Utah based MLM company which has now agreed to pay $1.2 million to  Melaleuca, of Idaho which was to settle a lawsuit filed in 2009.  What was the lawsuit all about or the allegations?  Max International distributors recruited Melaleuca reps and compelled them to breach their contracts.

This is one thing that most would know…lawsuits are very ugly and unwelcomed. However there are some very valuable lessons that can be learned from them. 

Lesson 1:

Why on earth would anyone want to be associated with a company that is so focused on  “irritating, crushing” and “stomping out”  the competition,  than being in a company that is intent on “standing up” and “championing” their own distributors. 

It is never in anyone’s best interest to  join a company that delights in legal bickering and back biting. 

Investigate  the company’s track record to see for YOURSELF how often they have been involved in lawsuits, especially those involving their own  distributors. 

It’s one thing to engage other companies looking to protect the establishment of the company and reps – a whole different ballgame to be at odds and constantly in litigation with  the most important people of the organization and the survival of the company, YOU the distributors. 

Just think if there were less legal battles there would be more in the compensation plan for you.  Yup every legal battle takes away from money the company could be sharing with you.  Someone has to pay the $1.2 million that Max International owes Melaleuca.

Lesson 2: to follow in Part 2

Go ahead read the  laundry list of lawsuits here: who knows you may  just turn up something you didn’t know. http://www.mlmwatchdog.com/home_index_mlm_lawsuits_court_cases.html

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Dave and Darlene Mills
Leadership With A Vision

“You cannot teach a man anything. You can only help him discover it within himself.” — Galileo

Ms. Dorfman’s Lawsuit With Melaleuca

I would like to first thank Bob and Anna Basset of http://togethertothetop.com for providing much of the input to this article. It is highly recommended that you take a moment to  read the lawsuit between Ms. Terry Dorfman and Melaleuca.  I know lots of reading.  But this stuff goes on everyday in network marketing and we seem to continually turn a blind eye o the fact that MLM companies have one guy in mind (usually) themselves.  Thanks to Rod Cook at MLM Watchdog for supplying the post!

Lawsuits are very unpleasant, but there sure can be lessons learned in between the lines.  Below are just a few lessons that can be learned from Ms. Dorfman’s experience:

It is never in anyone’s best interest to join a company  more focused on  “vexing” or “stomping out”  other companies  than “standing up” and “championing” their own distributors. 

It is never in anyone’s best interest to  join a company that delights in legal bickering. Investigate  the company’s track record to see for YOURSELF how often they have been involved in lawsuits, especially those involving their own  distributors.  It’s one thing to engage other companies looking to protect the establishment of the company and reps – quite a different story to be at odds and constantly in litigation with  the most important people of the organization and the survival of the company, the distributors.

Never join a company that plays “Let’s Make A Deal!”  Unless everyone is treated the same, you will never know what’s going on in the boardroom.

Never accept a deal.  If you accept a good position, you will never be able to tell your prospects or team that this is a level playing field.

Never offer a deal.    You are setting yourself up for huge problems – conflicts, resentments and lawsuits.

Read your policies and procedures.  It is of no consequence to the company which clause you are in violation of.  What is of consequence is the length of the contract. The longer the policies and procedures, the more clauses are at the companies disposal to use against YOU – relevant or not.  It is in the companies [sole discretions]. They do what they want when they want.

Read your policies and procedures.  This will shock and surprise many of you to know that you  are responsible for monitoring and supervising the activities of your downline.  You did not sign up to supervise or monitor the activities of others, but you may have signed a contract which makes you legally responsible for the actions of hundreds or thousands of people in your downline.  There is no way this can be achieved, but the company expects you to perform this duty…or you are fired if you fail. 

Read your policies and procedures.  You may not feel the affect than not reading your policies and procedures will have on you as you just start out in network marketing, But rest assured as you begin to make a name for yourself, you start to show up on the company radar.  Look there is “Johnny”, look at him rock and roll he is recruiting and bringing in lots of volume for the company.  We may just need some of that money we are paying out to him and the other top earners to pay for our legal team, the leer jet and the shareholders.  We may need to use “clause 18.1.3″ against him. 

Never make an income claim or guarantee to  anyone of any amount of income.  It is illegal and it is called ‘enticement’, it can land you and your company in legal troubles.  As distributors all we can do is present the compensation plan and any income disclosures provided by our company.

Never join a company that violates its own policies and procedures.  If corporate is allowed to ‘cross-recruit’ distributors in other companies, but forbids you from doing the same, there is something wrong.

Network Marketing is just another way to deliver goods and services to the end consumer. It’s a business just like any other.

Just be sure of whom you’re doing business with.

Thank you  again Bob and Anna Bassett  for the inspiration to draw more attention to these situations and the ongoing education you provide to anyone willing to learn.

Commit To Success Today
Dave and Darlene Mills
Leadership With A Vision

“You cannot teach a man anything. You can only help him discover it within himself.” — Galileo

MonaVie Sues Zrii – Copycat Compensation Plan

For a new company, MonaVie is really making a name for itself, in the ways that it would like?…perhaps not. They have been named in many lawsuits  in just a few short years. Either being sued or MonaVie bringing the lawsuits. Not the kind of publicity I would think a company would want promoted to the public at large.

MonaVie was introduced in January 2005. MonaVie markets nutritional products, specifically through distribution to an end consumer.

Zrii is also is a headliner in the law courts.  It too is just a young company. Zrii was officially launched in May 2008 as an international wellness company. Will these two companies survive all the publicity that lawsuits bring.

MonaVie has made some recent claims; suggesting that Zrii has copied their comp plan “word for word”. MonaVie Sues Zrii – Copycat Compensation Plan.

It would not be a first for a company to use another companies compensation plans framework in whole or in part.  It has been an occurrence ever since the second Network marketing company came on the scene. Although parts have been borrowed from this comp plan and this comp plan from this company and another, usually a company does not use the comp plan verbatim.

How will the courts view this new claim and of interest, will there be damages awarded? Is this in fact a copyright infringement?

MonaVie and Zrii as well as other networking companies are viewed by some as successful network marketing companies. In my opinion that depends on the research that you conduct.  MonaVie is alleging that Zrii “ripped off” its copyrighted compensation plan.

All network marketing companies, also referred to as Multilevel marketing companies, are always on the hunt it seems for new distributors.  For a distributor the compensation plan is what attracts them to this industry. It is a very important feature and determines just how you the distributor will be paid. There has to be some enticement, which is the compensation plan.

There is however a behaviour that is driven in this field. It drives the wrong behaviour to be able to successfully create a residual income. If the only reason to be in a MLM company is to recruit, you miss the purpose altogether.  Residual income is NOT based upon recruitment.  It is based upon actual sales of the product to the end consumer, the guy who just wants to use the product and not become a distributor. Yes, there is compensation for the signing up of a new recruit and the sales that will be generated by this new distributor, but that is a one time bonus, usually referred to as the “Fast Start Bonus”. It is important to recruit, but this should not be the main focus to build your business…find the customers!!

Compensation plans are important parts of the multilevel marketers’ ability to attract distributors because they determine the way monies are paid out.

In the lawsuit, MonaVie said the Zrii pay plan has “nearly identical arrangement, coordination and special layout of the titles, paragraphs and sections, highlighted examples, notes and graphic depictions.”

“They lifted specific provisions of our plan word for word in many cases,” Graden Jackson, attorney for MonaVie, said Friday.

Mary Anne Wood, the attorney for Zrii, said the company denied that it copied MonaVie’s plan.

In addition, MonaVie wants Zrii to pay for damages caused by the alleged copyright violation, with the amount to be determined at trial, as well as attorney and other fees.

MonaVie, of West Jordan, makes drinks based on the açai berry from the Amazon forests of Brazil. The drinks from Zrii, of Draper, are based on the amalaki berry from the foot of the Himalayan mountains in India.

MonaVie was launched in 2005 and says its cumulative sales topped $2.1 billion. Zrii was started in 2007, but has struggled since its top managers quit in February of 2009 in a dispute with owner William F. Farley.

Will these two companies survive the lawsuits?  Will they survive the publicity surrounding all the lawsuits? Time will tell.   These companies need some sound company management experience that overflows with integrity.

Never give up on your dreams. The difference between the impossible and the possible lies in a man’s determination. ~Tommy Lasorda

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Dave and Darlene Mills
Leadership With A Vision